Singapore is known to be one of the most expensive cities in the world, let alone owning a car here. It is no secret that Singaporeans take pride in having luxury cars, but the cost of owning one goes far beyond the hefty price tag. Singapore is known for its strict regulations and high taxes, which in turn leads to hidden costs when buying a car.
In this article, we will take a deeper dive into the hidden costs of buying a car in Singapore. We will explore the various aspects that one has to take into account before making such a significant investment.
Firstly, we will discuss the Certificate of Entitlement (COE), which is a necessary document that is required to own a car in Singapore. The COE is a permit that allows you to use a vehicle and is mandatory for all vehicles that are less than ten years old. It is a type of auction system, where the highest bidder wins the right to own a car. The price of COEs fluctuates and is dependent on demand and supply factors. In 2021, the cost of a COE for a car is around SGD 35,000. This price is on top of the cost of the vehicle itself, which can range from SGD 50,000 to SGD 200,000, depending on the make and model.
Secondly, we will talk about the Additional Registration Fee (ARF), which is a tax that is imposed on the open market value of the car. This tax starts at 100% of the car’s value for the first SGD 20,000 and increases according to the car’s value. For vehicles with an open market value above SGD 5 million, the ARF is capped at 20%. The ARF can add an additional SGD 20,000 or more to the cost of the car.
Next, there is the Goods and Services Tax (GST), which is currently set at 7%. This tax is charged on the final purchase price of the car, including COE and ARF. For example, if you purchase a car that costs SGD 100,000, plus SGD 35,000 for COE and SGD 20,000 for ARF, the total cost will be SGD 155,000. The GST will add an additional SGD 10,850 to the total cost.
One of the most significant hidden costs of owning a car in Singapore is the road tax. The road tax is calculated based on the engine capacity of the car and is paid annually. The cost of road tax can vary from SGD 70 to SGD 2,000 per year, depending on the engine capacity of the vehicle.
Car insurance is another hidden cost that must be taken into account. In Singapore, car insurance is mandatory, and the cost is dependent on various factors such as the make and model of the car, age of the driver, etc. The average cost of car insurance in Singapore is around SGD 1,200 to SGD 2,000 per year.
Maintenance costs are also an essential aspect of owning a car in Singapore. Vehicle maintenance includes servicing, repairs, and replacement of parts. The average cost of vehicle maintenance in Singapore ranges from SGD 100 to SGD 500 per service, depending on the make and model of the car.
One must also take into account the cost of parking in Singapore. The cost of parking can range from SGD 0.40 to SGD 5 per hour, depending on the location. Monthly parking rates can vary from SGD 50 to SGD 500.
Lastly, the depreciation of the car is a hidden cost that is often overlooked. In Singapore, the average lifespan of a car is ten years due to the COE system. After the ten-year mark, the car is mandatory to be scrapped. As a result, the resale value of a car depreciates rapidly, and this must be taken into account while making such a significant investment.
In conclusion, the cost of owning a car in Singapore goes far beyond the hefty price tag, and it is crucial to take all aspects into account before making such a significant investment. The hidden costs of owning a car in Singapore must be factored in, which includes COE, ARF, GST, road tax, car insurance, maintenance costs, parking costs, and depreciation. These costs vary depending on the make and model of the car and must be taken into account to make an informed decision. It is essential to weigh the pros and cons of owning a car in Singapore before making such a significant investment.
